AMID the economic chaos that dominated the headlines over the past week, nearly half-a-dozen UK-based or UK-listed cannabis companies released their latest financial figures.
Grow Group, Kanabo, MGC Pharmaceuticals, Celadon and Chill Brands all updated investors on their financial performance, with Oxford Cannabinoid Technologies’ interim results also expected in the coming weeks.
While revenue growth was unanimous across the board, suggesting ongoing growth throughout the sector, none of these companies came close to making a profit, and all but one saw their losses increase.
With markets still reeling from last week’s turmoil and business leaders across the globe preparing for an imminent recession, the race will now be on for each of these companies to tighten their purse strings and shift their operations towards profitability.
Grow Group released its financial results for the year to December 31, 2021, reporting strong revenue growth off the back of a ‘significant increase in the number of medical cannabis patients in the UK’.
The medical cannabis operator posted revenues of £5.14m during the year, up significantly from the £903k it posted in 2020.
According to the company, this 5.7x rise in revenues was thanks to a 300% increase in the number of patients being supplied by Grow in the UK, Germany and Ireland, reporting ‘over 2,000’ at year end.
Meanwhile, the company also managed to reduce its losses for the year, seeing its reported operating loss drop from £2.2m to £1.5m year-on-year.
Days after its results were published, Grow announced plans for a new capital raise through investment platform Growthdeck ‘as it targets major expansion’, which it hopes will see it achieve revenues of £300m by 2026.
This is despite the company warning in its FY results that it ‘expects it to be harder to raise funds’ in the current macroeconomic environment.
It added that the current global economic situation could mean ‘the company will face higher costs and may also impact revenues through affecting patients’ ability to pay for their medicines, particularly in the UK where almost all the company’s revenues are driven by ‘private’ patients who pay for cannabis medicine.’
Grow Group’s CEO Ben Langey told BusinessCann: “To be clear our UK revenues are increasing and will continue to. Our UK revenues in 2022 will be materially higher than 2021, but most importantly we are helping twice as many patients in the UK this year compared to last.”
Kanabo published its figures for the six months to June 30, 2022, marking its first set of results since it acquired The GP Service in February 2022.
The LSE-listed company saw revenues rise more than tenfold from around £20k in H1 2021 to £239k, driven almost entirely by its recent acquisition.
According to Kanabo, £208k came from the sale of primary care services at The GP Service, while the remaining £31k was generated from the ‘development and distribution’ of its products.
While its recent acquisition has helped Kanabo boost its revenues, it has also driven up costs significantly, seeing underlying general and administrative costs increase from £888k to £2.2m, with £639k coming directly from staff and share-based payments.
This saw operating losses rise from £1.19m to £3.8m year-on-year, including ‘acquisition-related exceptional costs of just over £1m.
The period also saw Kanabo decide ‘not to proceed’ with its proposed acquisition of Materia, seeing Lyphe Group agree to acquire the company instead in September this year.
Kanabo said it ‘remains in negotiations for the full repayment’ of the C$1m it made to Materia as part of the now defunct acquisition deal, and has reportedly received C$55k in interest payments.
In June, Kanabo stated that there was no ‘sufficient evidence to demonstrate’ Materia has the cash to repay a £1m loan Kanabo made as part of the proposed acquisition, but assured investors that the loan was fully impaired.
MGC Pharmaceuticals also unveiled its financial figures for the 12 months to June 30, 2022 over the last week, revealing losses of over A$20m.
The company reported a year-on-year revenue increase from just under A$3m in the year to June 30, 2021, to A$4.7m.
This reportedly included a ‘record’ A$2.7m in sales of its phytocannabinoid products in FY 22, with 17.9k units sold worldwide.
However, MGC’s revenue gains were more than wiped out by a near $5m rise in operating losses for the year, rising from A$15.8m to A$20.8m, equating to a loss per share of A$0.79.
A large part of these growing losses was attributed to an ‘impairment expense’ of A$5m, understood to be related to delays in the construction of its facility in Malta.
These growing losses mean that the company will rely on further ‘capital to finance existing debt and fund ongoing corporate expenditure’ over the next 12 months, with its cash and cash equivalents dropping from A$5.4m to A$1.2m over the period.
A day after the company released its full year results, it announced the appointment of pharmaceutical industry veteran Yifat Steuer as its new Chief Operating Officer and Deputy Chief Executive Officer.
Furthermore, MGC said it had brought on UK capital markets advisor Hannam & Partners as financial and corporate advisors to the company with immediate effect, in signs a new capital raise could be imminent.
“Hannam & Partners are a highly regarded UK advisory firm with a long track record in UK capital markets, and more recently in the UK and EU cannabis sector.”
Recent LSE debutant Celadon Pharmaceuticals also published its interim results over the last week, marking its first set of financial figures since going public in March.
Over the six months to June 30, 2022 the company reported £11.2k in revenues, which came entirely from LVL’s clinical study, up from no revenues in the same period a year earlier, with a gross loss of £12.4k.
Operating losses for the period also doubled year-on-year to £2m, which Celadon says reflected ‘the scale up in the group’s people, operations and cost base pursuant to our enlarged group business plan’.
However, the company’s net loss before tax jumped from £1.9m to £13.5m, due to a number of ‘one off and non cash items’.
These included a £6.4m share-based payment charge reflecting the net cost of its reverse acquisition and AIM listing, alongside a £3.4m finance charge on convertible loan notes.
Celadon’s cash position also increased significantly during the period, reporting cash as of the end of June 2022 of £9m, up from £2.8m a year earlier. As of September 26, 2022, this has reportedly dropped to £7.3m.